Order in the matter of Insider Trading in the scrip of 63 Moons Technologies Limited (Erstwhile Financial Technologies (India) Limited.

SEBI/WTM/SR/IVD/ID–6/ 44 /08/2017 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI CORAM: S. RAMAN, WHOLE TIME MEMBER ORDER UNDER SECTIONS 11(1), 11(4) AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 AND REGULATION 11 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF INSIDER TRADING) REGULATIONS, 1992 READ WITH REGULATION 12 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015. IN THE MATTER OF INSIDER TRADING IN THE SCRIP OF 63 MOONS TECHNOLOGIES LIMITED [ERSTWHILE FINANCIAL TECHNOLOGIES (INDIA) LIMITED] –

NAME PAN 1. SHRI SHREEKANT JAVALGEKAR AARPJ9648L 2. SMT ASHA SHREEKANT JAVALGEKAR ABRPJ2888H 3. SHRI MANISH P. SHAH AMXPS9294F 4. SHRI PRAKASH SHAH AOUPS4514H 5. SHRI HARIHARAN VAIDYALINGAM AABPV4103E 6. SHRI V. ARVINDKUMAR IYENGAR AADPI3727M 7. SMT DHANASHRI IYENGAR AEQPK1802C 8. SHRI BHARAT KANAIYALAL SHETH AAQPS2482L

Background –

1.1 Securities and Exchange Board of India (“SEBI”) conducted an investigation in the scrip of 63 Moons Technologies Limited [erstwhile Financial Technologies (India) Limited] (hereinafter referred to as “FTIL”) for the period from April 27, 2012–July 31, 2013 (“Investigation Period”). The aforesaid investigation was initiated by SEBI, pursuant to receipt of a complaint dated September 26, 2014, inter alia alleging insider trading by certain individuals while trading in the scrip of FTIL.

1.2 The Investigation Report inter alia states – i. FTIL was incorporated as a private limited company in 1988. The status of FTIL was converted from private limited to public limited on August 1994. FTIL was subsequently renamed as 63 Moons

Technologies Limited on May 27, 2016. The Registered Office of FTIL is at Shakti Tower–1, Premises E, 766, 7th Floor, Anna Salai, Thousand Lights, Chennai–600002, Tamil Nadu.

ii. The shareholding pattern in FTIL for the quarters ending March 2012; June 2012; September 2012; December 2012, March 2013; June 2013; September 2013 and December 2013 [Source–Bombay Stock Exchange (“BSE”) website], was as follows –

March 2012 June 2012 September 2012 No. of No. of % No. of No. of % No. of No. of % Shareholders Shares Shareholders Shares Shareholders Shares Promoter 12 2,10,52,582 45.69 12 2,10,52,582 45.69 12 2,10,51,582 45.69 Non– Promoter 51,615 2,50,25,955 54.31 50,059 2,50,25,955 54.31 45,010 2,50,26,955 54.31 Total 51,628 4,60,78,537 100.00 50,072 4,60,78,537 100.00 45,023 4,60,78,537 100.00

December 2012 March 2013 June 2013 No. of No. of % No. of No. of % No. of No. of % Shareholders Shares Shareholders Shares Shareholders Shares Promoter 12 2,10,42,582 45.67 12 2,10,27,582 45.63 12 2,10,27,582 45.63 Non– Promoter 46,749 2,50,35,955 54.33 48,336 2,50,50,955 54.37 47,514 2,50,50,955 54.37 Total 46,762 4,60,78,537 100.00 48,349 4,60,78,537 100.00 47,527 4,60,78,537 100.00

September 2013 December 2013 No. of No. of % No. of No. of % Shareholders Shares Shareholders Shares Promoter 12 2,10,27,582 45.63 12 2,10,25,878 45.63 Non– Promoter 75,387 2,50,50,955 54.37 68,704 2,50,52,659 54.37 Total 75,400 4,60,78,537 100.00 68,717 4,60,78,537 100.00 iii. The Directors in FTIL were – TABLE I NAME DESIGNATION DATE OF DATE OF CESSATION APPOINTMENT 1. CHAIRMAN AND JIGNESH PRAKASH SHAH MANAGING DIRECTOR 15.09.2000 20.11.2014 2. DEWANG SUNDERRAJ NERALLA WHOLE-TIME DIRECTOR 15.09.2000 20.11.2014 3. MANJAY P SHAH WHOLE-TIME DIRECTOR 01/04/2012 20.11.2014 4. PANDURNAG GHANASHAM KAKODKAR DIRECTOR 31.01.2001 20.07.2013 5. CHANDRAKANT UTTAMCHAND KAMDAR DIRECTOR 23.03.2009 21.10.2013 6. R. DEVARAJAN DIRECTOR 23.03.2009 20.08.2013 7. CHAITAN MANBHAI MANIAR DIRECTOR 15.10.2010 26.08.2013 8. RAVI KANAIYALAL SHETH DIRECTOR 15.09.1994 21.02.2014 9. PADMANABH RAMCHANDRA BARPANDE DIRECTOR 11.08.2010 10.08.2013 iv. The Promoters of FTIL were – TABLE II NAME SHAREHOLDING (%) 1. JIGNESH PRAKASH SHAH 18.08 2. DEWANG SUNDERRAJ NERALLA 0.13 3. RUPAL J. SHAH 0.12 4. MANISH P. SHAH 0.19 5. MANJAY P. SHAH 0.17 6. PUSHPA P. SHAH 0.13 7. PRAKASH B. SHAH 0.08 8. BINA M. SHAH 0.00 9. TEJAL M. SHAH 0.00 10. MANDAR NERALLA 0.00 11. LA–FIN FINANCIAL SERVICES PRIVATE LIMITED (“La–Fin”) 26.76 12. NAKSHI M. SHAH 0.00 *During the period June 30, 2012 to December 31, 2013, the Total Promoter Shareholding in FTIL moved from 45.69% to 45.63%.

A. NSEL Circular dated July 31, 2013 –

The Investigation Report states – i. Vide a Circular dated July 31, 2013 (Ref. No.: NSEL/TRD/2013/065), the National Spot Exchange Limited (“NSEL”) suspended trading in all contracts (except e-series contracts) and deferred settlement of all pending contracts.

ii. As per information obtained from the erstwhile Forward Market Commission (“FMC”) (FMC merged with SEBI w.e.f. September 28, 2015), which was subsequently examined by SEBI, the chronology of events leading to the issuance of the aforementioned NSEL Circular and thereafter, is as under –

TABLE III DATE PARTICULARS 1. 05.06.2007 Vide Notification S. O. No. 906(E) dated June 5, 2007, the Department of Consumer Affairs, Ministry of Consumer Affairs, Govt. of India (“DCA”) granted exemption to NSEL from the operation of the Forward Contracts (Regulation) Act, 1952 (“FCRA”) for all forward contracts of one day duration for the sale and purchase of commodities traded on its platform, subject to the following conditions – a. No short sale by Members of the Exchange shall be allowed; b. All outstanding positions of the trade at the end of the day shall result in delivery; c. NSEL shall organize spot trading subject to regulation by the authorities regulating spot trade in the areas where such trading takes place; d. All information or returns relating to the trade as and when asked for shall be provided to the Central Government or its designated agency;

e. The Central Government reserves the right to impose additional conditions from time to time as it may deem necessary, and f. In case of exigencies, the exemption will be withdrawn without assigning any reason in public interest. 2. 06.02.2012 Vide Notification dated February 6, 2012, DCA substituted the words ‘its designated agency’ in condition (d) above, with ‘Forwards Market Commission’. As a result of the aforesaid, ‘All information or returns relating to the trade as and when asked for shall be provided to the Central Government or FMC’. 3. 22.02.2012 Upon an analysis of the information/returns related to trade of NSEL, FMC sought clarifications from them vide letter dated February 22, 2012, in respect of the following issues, viz. – a. The condition of ‘no short sale by members of the exchange shall be allowed’ was not being met by NSEL. b. As per the trade data submitted by NSEL, it was observed that 55 contracts offered for trade on NSEL were with settlement periods exceeding 11 days and all such contracts traded on NSEL were in violation of provisions of FCRA. 4. 10.04.2012 Pursuant to an examination of NSEL’s reply (dated February 29, 2012) to its letter dated February 22, 2012, FMC informed DCA that the aforesaid entity failed to fulfil the conditions stipulated under the Notification dated June 5, 2007. 5. 27.04.2012 Vide Show Cause Notice (“SCN”) dated April 27, 2012, DCA directed NSEL to show cause as to why action should not be taken against it for violation of the conditions contained in the Notification dated June 5, 2007. 6. 29.05.2012 NSEL submitted its reply to the SCN inter alia stating – “Deposit of goods in warehouse prior to execution of sale transaction (i.e. intra-day squaring off on trading) was not possible if sale order needed to be validated against physical stock lying in the Exchange warehouse because it was not possible to transfer warehouse receipt in favour of the buyer instantaneously after the trade and also due to constraints on warehousing capacity, it was not practical to insist that the sellers must deliver stock first into Exchange warehouse.” 7. 02.08.2012 FMC forwarded its comments to DCA in respect of the issues identified at point 3(a)–(b), inter alia stating – a. Short Sale by members of the Exchange: From the reply submitted by NSEL vide its letter dated May 29, 2012; it appeared that NSEL did not insist upon ownership of goods before allowing its members to place the sale order.

FMC was of the view that all those sale transactions which were not backed by the ownership of goods were in violation of the condition of "no short sale by the members of the Exchange shall be allowed". b. Contracts in which settlement period goes beyond 11 days period: - In view of the definition of "Forward Contract" under FCRA, FMC was of the view that all the contracts traded on NSEL which provided settlement schedule for a period exceeding 11 days were Non-Transferable Specific Delivery (“NTSD”) contracts. Thus, even if the Gazette Notification did not specify the delivery period, NSEL had to settle the delivery for all open position within a period of 11 days as the NSEL was allowed to only trade in one day forward contracts and was obliged to ensure delivery and settlement within 11 days.

8. 03.10.2012 An article published in ‘The Economic Times’ reported that SCN was issued by DCA to NSEL. Further, the article reported that DCA was probing alleged discrepancies in contract positions at NSEL. The article also reported that FMC observed – a. NSEL had not made it mandatory for its sellers to actually deposit goods in the warehouse before they took a short position; b. NSEL did not have a stock check facility for validating a Member's position, and c. 55 contracts trading on NSEL had a settlement period exceeding 11 days. 9. 03.10.2012 Through an ‘Exchange Communication’, NSEL informed all its Members regarding SCN dated April 27, 2012, its reply to the SCN and also offered clarifications on the article in ‘The Economic Times’ as under – "....All contracts traded on NSEL are for one day duration only…. With respect to short sale, the Exchange has clarified its operational procedure, which does not allow any member to carry out short sale, as the seller is forced to deliver as per the scheduled delivery day. Hence, Exchange is in full compliance with the provisions of FCRA r/w Gazette notification dated June 5, 2007. Neither Central Government nor FMC has directed the Exchange to discontinue any of the contracts that has been allowed for trading by the Exchange.” 10. 26.12.2012 The Director, Directorate of Marketing, Govt. of Maharashtra, vide an Order dated December 26, 2012, suspended the License granted to NSEL as ‘Private Market’ under the Maharashtra Marketing (Development And Regulation) Act, 1963 (“APMC Act”).

In the aforesaid Order, it was observed – “NSEL has failed to exercise its regulatory function in respect of the activities at its terminals and thereby, ensuring transparency in transactions.” The Order further concluded that NSEL failed to fulfil the objectives aimed at by the State (Maharashtra) in view of the Agricultural Marketing Reforms agenda set by the Government of India. 11. 12.07.2013 Vide letter dated July 12, 2013, DCA directed NSEL to give an Undertaking that – a. No further/fresh contracts shall be launched by NSEL and b. All the existing contracts will be settled on the due dates. 12. 16.07.2013 Vide Circulars dated July 16, 2013 and July 22, 2013, NSEL suspended launching of any new 22.07.2013 commodity, product or new center. Further, NSEL reduced the settlement and delivery period of all existing contracts to T+10 days and made them ‘trade to trade’. 13. 31.07.2013 Vide Circular dated July 31, 2013, NSEL suspended trading in all contracts (except e-series contracts) and deferred settlement of all pending contracts. 14. 06.08.2013 In partial modification of the Notification dated June 5, 2007, DCA imposed the following additional conditions on NSEL – a. No trading in the existing e-series contracts; b. No further/fresh one–day forward contracts in any commodity shall be undertaken by NSEL without prior approval of the Central Government; c. Settlement of all outstanding one–day forward contracts at NSEL shall be done under the supervision of FMC.

15. 06.08.2013 NSEL suspended trading in e–series contracts. 16. 17.12.2013 FMC issued an Order dated December 17, 2013, wherein it held FTIL to not be a ‘fit and proper person’ for continuing as a shareholder of 2% or more of the paid-up equity capital of Multi Commodity Exchange of India Limited (“MCX”). Further, FMC held that Shri Jignesh Shah, Shri Joseph Massey and Shri Shreekant Javalgekar were not ‘fit and proper person’(s) and directed them not to hold any position in the management/Board of any Stock Exchange recognised/registered by the Govt. of India/FMC.

In the aforementioned Order, the FMC observed the following irregularities in the functioning of NSEL – a. The responsibility for planning, directing and controlling the activities of NSEL had been placed on the KMPs. However, KMPs of NSEL over the years had failed to meet their responsibilities with respect to planning, directing and controlling, details of which are as follows:  As per the exemption granted under Section 27 of the FCRA, only one day forward contracts were permitted, whereas paired contracts were being run on NSEL since September, 2009.  The defaulters were given more and more time to bring in funds whereas Rule 28 of NSEL provided for debarment of defaulting members. On the other hand, NSEL allowed and facilitated continuous trading by the defaulting members allowing them to receive more and more funds through the Exchange without verification of goods in the warehouses. b. Buyers with poor credentials had been introduced over the period and the default had started in 2011-12, itself. c. NSEL was granted exemption under Section 27 of the FCRA to trade on one day forward contract in commodities; however, from the year 2009 onwards, with the approval of the Board, it started trading in paired contracts in commodities in such a manner that it would generate an assured return of 13% to 18% per annum, akin to financial transactions under the garb of commodities trading. d. Despite being aware that the transactions taking place on its platform were violating the primary conditions of exemptions granted to them under Section 27 of FCRA, the Board of Directors allowed short selling with no system in place to verify physical possession of goods by sellers before allowing them to trade and launched contracts with long term settlement instead of ensuring the settlement of all contracts within a period of 11 days, in contravention of the provisions of FCRA. e. Many of the defaulting borrowers were allowed to continue trading on NSEL despite defaulting several times and instead of debarring them from trading, the Board and management went all out in gross violation of their bye-laws and rules, to allow them to trade for extended periods.

17. In the Internal Audit Report of NSEL for the period from April 1, 2011 to September 30, 2011, the Internal Auditor observed – “NSEL was taking higher risk of credit default as it does not hold any security or line. The activity entails funding of the transactions and the provisions of NBFC and the Company has not secured any such license as an NBFC for carrying out such activity and in order to avoid the application pertaining to NBFC, the transaction needs to be restructured in the books of Accounts of the Company.”

B. Unpublished Price Sensitive Information (“UPSI”) –

The Investigation Report also states as under – i. The SEBI (Prevention of Insider Trading) Regulations, 1992 (“Insider Trading Regulations, 1992”) defines ‘price sensitive information’ and ‘unpublished’ as under – a. Regulation 2(ha) – “price sensitive information” means any information which relates directly or indirectly to a company and which if published is likely to materially affect the price of securities of company. Explanation – The following shall be deemed to be price sensitive information – i. Periodical financial results of the company; ii. Intended declaration of dividends (both interim and final); iii. Issue of securities or buy-back of securities; iv. Any major expansion plans or execution of new projects. v. Amalgamation, mergers or takeovers; vi. Disposal of the whole or substantial part of the undertaking; and vii. Significant changes in policies, plans or operations of the company.

b. Regulation 2(k) – “unpublished” means information which is not published by the company or its agents and is not specific in nature.

ii. The determination of UPSI by the Investigating Authority was made upon a consideration of inter alia the following factors – a. The issuance of the SCN dated April 27, 2012, by DCA, triggered a chain of events in respect of NSEL and its holding company i.e. FTIL. b. NSEL’s press release dated October 3, 2012, was issued to cover up the irregularities in its functioning and to mislead the public. c. The discontinuation of irregularities in the functioning of NSEL i.e. cessation of short selling by its Members, pairing of contracts and settlement of contracts beyond 11 days, was imminent. d. The discontinuation of irregularities would in turn result in impending payment defaults by Members of NSEL and lead to the loss of reputation of the Promoters/Management of FTIL.

e. Prior to the aforesaid SCN, the irregularities in the functioning of NSEL were not in the knowledge of the concerned regulatory authority and no concrete action had yet been taken until the issuance of the aforesaid SCN, by DCA to NSEL.

iii. The UPSI in respect of the shares of FTIL was therefore, the implication of the SCN dated April 27, 2012, issued by DCA to NSEL i.e. suspension of contracts and deferral of settlements and subsequent payment defaults by Members of NSEL and loss of reputation of Promoters/Management of FTIL.

iv. Period of UPSI: April 27, 2012–July 31, 2013: The UPSI came into existence on April 27, 2012, upon the issuance of the SCN to NSEL, by the DCA. The UPSI ceased to exist when NSEL suspended trading in all contracts (except e-series contracts) and deferred settlement of all pending contracts on July 31, 2013.

v. Connection between FTIL and NSEL – a. NSEL, an unlisted company incorporated under the provisions of the Companies Act, 1956, on May 18, 2005, was a wholly–owned subsidiary of FTIL. b. FTIL’s shareholding in its subsidiary i.e. NSEL, was at 99.99%. c. FTIL was also the Promoter of NSEL. d. The Promoters of FTIL were inter alia Shri Jignesh Shah (18.08%) and La–Fin (26.76%). LA–FIN FINANCIAL SERVICES PRIVATE LIMITED [PROMOTER OF FTIL HOLDING 26.76%] AND SHRI JIGNESH SHAH [PROMOTER OF FTIL HOLDING 18.08%] ↓ FINANCIAL TECHNOLOGIES INDIA LIMITED [PROMOTER OF NSEL HOLDING 99.99%] ↓ NSEL vi. Connection between FTIL and MCX – a. MCX is a listed company incorporated under the provisions of the Companies Act, 1956, on … b. FTIL’s shareholding in MCX was at 26%. c. FTIL was the Promoter of MCX. d. The Promoters of FTIL were inter alia Shri Jignesh Shah and La–Fin.

LA–FIN FINANCIAL SERVICES PRIVATE LIMITED [PROMOTER OF FTIL HOLDING 26.76%] AND SHRI JIGNESH SHAH [PROMOTER OF FTIL HOLDING 18.08%] ↓ FINANCIAL TECHNOLOGIES INDIA LIMITED [PROMOTER OF MCX HOLDING 26%] ↓ MCX vii. Connection between FTIL, NSEL and MCX –

The Investigation Report also states – a. Shri Jignesh Shah and Shri Shreekant Javalgekar were Directors in FTIL, NSEL and MCX. b. Shri R. Devarajan was a Director in FTIL and NSEL. c. Shri P. R. Barapande, Shri P. G. Kakodkar and Shri C. M. Maniar were Directors in FTIL and MCX. d. Shri Paras Ajmera was a Director in MCX (nominated by FTIL). e. Shri Joseph Massey was a Director in NSEL and MCX. f. Shri Dilip Tambe (Senior Vice President – Communications Department, FTIL) also worked for NSEL. g. FTIL, NSEL and MCX were therefore, all companies under a common management with common Directors and employees.

viii. Impact of NSEL’s Circular on the share price of FTIL –

Any material development(s) concerning/having an impact on the business of the unlisted subsidiary company i.e. NSEL, would have automatically impacted the business (including share price, etc.) of its listed holding company i.e. FTIL.

As on July 31, 2013; August 1, 2013 and August 2, 2013 i.e. prior to and subsequent to the issuance of NSEL’s Circular, the opening and closing share price of FTIL on BSE and NSE were as under –

TABLE IV DATE OPENING HIGHEST LOWEST CLOSING PRICE SHARES DIFFERENCE IN PRICE TRADED PRICE TRADED PRICE TRADED SHARE PRICE (%) BSE 31.07.2013 ₹547.00 ₹559.00 ₹514.10 ₹541.55 94,707 *-66.76% 01.08.2013 ₹487.40 ₹487.40 ₹180.35 ₹191.75 62,54,247 02.08.2013 ₹173.00 ₹178.85 ₹105.50 ₹151.25 64,80,729 *-80.52% NSE 31.07.2013 ₹544.00 ₹559.90 ₹513.95 ₹539.85 6,18,451 *-66.66% 01.08.2013 ₹485.90 ₹485.90 ₹180.00 ₹191.65 2,66,79,527 02.08.2013 ₹173.30 ₹175.40 ₹105.45 ₹147.50 2,26,14,644 *-80.47% *The difference in share price is calculated as a percentage of the difference between the closing price on July 31, 2013 and the lowest traded price on (a) August 1, 2013 and (b) August 2, 2013.

 On July 31, 2013, the share price of FTIL closed at ₹541.55 (BSE) and ₹539.85 (NSE).  Since the scrip of FTIL was also trading in Futures & Options Segment (“F&O Segment”) during the Investigation Period, there was no specified Price Band.

 As soon as the announcement of suspension of trading by NSEL was made, the price of the scrip decreased substantially on August 1, 2013 and August 2, 2013.  In just two days, the share price of FTIL touched a low of ₹105.50 on August 2, 2013 i.e. a fall of ₹436.05 (80.52%) from the closing price of July 31, 2013, at BSE and a low of ₹105.45 on August 2, 2013 i.e. a fall of ₹434.40 (80.47%) from the closing price of July 31, 2013, at NSE.  The volume of the scrip increased substantially on –  August 1, 2013 (at BSE–65 times the volume of the scrip on July 31, 2013, and at NSE–42 times the volume of the scrip on July 31, 2013)  August 2, 2013 (at BSE–approximately 68 times the volume of the scrip on July 31, 2013, and at NSE– approximately 36 times the volume of the scrip on July 31, 2013).

ix. There were 12 major corporate announcements during the Investigation Period inter alia pertaining to FTIL’s Board Meeting considering financial results and recommending final/interim dividend, declaration of interim/final dividend, record date, announcement of quarterly/annual financial results of FTIL alongwith the information about the Press Release made by FTIL’s subsidiary i.e. NSEL. The subsequent impact of the aforementioned corporate announcements on the price and volume of FTIL’s scrip was also examined by the Investigating Authority.

C. Insiders – i. The Insider Trading Regulations, 1992, defines ‘insider’, ‘connected person’ and ‘deemed to be connected person’ as under – a. Regulation 2(e) – “insider” means any person who, i. is or was connected with the company or is deemed to have been connected with the company and who is reasonably expected to have access to unpublished price sensitive information in respect of securities of a company, or ii. Has received or has had access to such unpublished price sensitive information.

b. Regulation 2(c) – "connected person" means any person who – i. Is a director, as defined in clause (13) of section 2 of the Companies Act, 1956 (1of 1956), of a company, or is deemed to be a director of that company by virtue of sub-clause (10) of section 307 of that Act; or ii. Occupies the position as an office or an employee of the company or holds a position involving a professional or business relationship between himself and the company (whether temporary or permanent) and who may reasonably be expected to have an access to unpublished price sensitive information in relation to that company. [Explanation:—For the purpose of clause (c), the words “connected person” shall mean any person who is a connected person six months prior to an act of insider trading;]

c. Regulation 2(h) – "person is deemed to be connected person" if such person – i. is a company under the same management or group, or any subsidiary company thereof within the meaning of sub-section (1B) of section 370, or sub-section (11) of section 372, of the Companies Act, 1956 (1 of 1956) or sub-clause (g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) as the case may be; ii. is an intermediary as specified in section 12 of the Act, Investment company, Trustee Company, Asset Management Company or an employee or director thereof or an official of a stock exchange or of clearing house or corporation; iii. is a merchant banker, share transfer agent, registrar to an issue, debenture trustee, broker, portfolio manager, Investment Advisor, sub-broker, Investment Company or an employee thereof, or is member of the Board of Trustees of a mutual fund or a member of the Board of Directors of the Asset Management Company of a mutual fund or is an employee thereof who have a fiduciary relationship with the company; iv. is a Member of the Board of Directors or an employee of a public financial institution as defined in section 4A of the Companies Act, 1956; v. is an official or an employee of a Self-regulatory Organisation recognised or authorised by the Board of a regulatory body; vi. is a relative of any of the aforementioned persons; vii. is a banker of the company; viii. relatives of the connected person; or ix. is a concern, firm, trust, Hindu undivided family, company or association of persons wherein any of the connected persons mentioned in sub-clause (i) of clause (c), of this regulation or any of the persons mentioned in sub-clause (vi), (vii) or (viii) of this clause have more than 10 per cent of the holding or interest.

ii. The Directors and Officers in FTIL, NSEL and MCX during the UPSI period were as under –

TABLE V DESIGNATION/RELATIONSHIP OF ENTITY WITH COMPANY ENTITY NAME DESIGNATION/RELATIONSHIP CO. FROM TO VICE CHAIRMAN, NON-EXECUTIVE NON MCX 01/04/2008 31/10/2013 INDEPENDENT DIRECTOR MANAGING DIRECTOR FTIL 15/09/2009 20/11/2014 1. JIGNESH P. SHAH NON-EXECUTIVE DIRECTOR NSEL 18/05/2005 22/12/2014 MANAGING DIRECTOR & CHIEF EXECUTIVE MCX 01/07/2012 22/10/2013 OFFICER DIRECTOR - FINANCE FTIL 25/10/2004 30/06/2012 2. SHREEKANT JAVALGEKAR NON EXECUTIVE DIRECTOR NSEL 25/02/2011 13/08/2013 NON-EXECUTIVE NON INDEPENDENT MCX 01/08/2008 12/11/2013 DIRECTOR (NOMINEE OF FTIL) 3. PARAS AJMERA DIRECTOR – OPERATIONS & HR FTIL 01/10/2005 TILL DATE ADDITIONAL DIRECTOR MCX 28/06/2012 30/08/2013 4. P R BARPANDE DIRECTOR FTIL 11/08/2010 11/08/2013 NON-EXECUTIVE NON INDEPENDENT MCX 01/06/2009 30/09/2013 DIRECTOR 5. JOSEPH MASSEY NON EXECUTIVE DIRECTOR NSEL 18/05/2005 21/10/2013 DIRECTOR FTIL 23/03/2009 20/08/2013 6. R. DEVARAJAN INDEPENDENT NON EXECUTIVE DIRECTOR NSEL 30/11/2011 08/08/2013 NSEL 7. FTIL PROMOTER/HOLDING COMPANY MCX NOT APPLICABLE HEAD FINANCE & ACCOUNTS 15/03/2011 31/03/2013 MCX 8. HEMANT VASTANI CHIEF FINANCIAL OFFICER 01/04/2013 31/03/2014 SR. VICE PRESIDENT- PRODUCT MCX 01/04/2010 30/04/2014 9. SAMEER PATIL KNOWLEDGE MANAGEMENT TEAM CHAIRMAN, NON-EXECUTIVE MCX 29/09/2003 01/09/2013 10. VENKAT CHARY INDEPENDENT DIRECTOR 11. LA– FIN PROMOTER FTIL NOT APPLICABLE 12. RAVI K SHETH DIRECTOR FTIL 15/09/1994 21/02/2014 13. CHANDRAKANT KAMDAR DIRECTOR FTIL 23/03/2009 21/10/2013 14. N. BALASUBRAMANIAM DIRECTOR FTIL 22/08/2013 27/08/2013 WHOLE-TIME DIRECTOR 01/04/2012 20/11/2014 FTIL 15. MANJAY SHAH DIRECTOR - BUSINESS DEVELOPMENT 03/01/2002 31/03/2012 16. DEWANG NERALLA WHOLE-TIME DIRECTOR FTIL 15/09/2000 20/11/2014 17. B D PAWAR DIRECTOR(NON-EXECUTIVE) NSEL 15/05/2007 07/08/2013 18. SHANKARLAL GURU DIRECTOR(NON-EXECUTIVE, CHAIRMAN) NSEL 15/05/2007 07/08/2013 19. SHASHIDHARAN KOTIAN CHIEF FINANCIAL OFFICER NSEL 01/04/2010 24/03/2014 20. ANJANI SINHA MD & CEO NSEL 18/07/2011 20/08/2013 21. MANISH PANDEY MANAGER – BUSINESS DEVELOPMENT NSEL 18/04/2011 23/10/2013 22. AMIT MUKHERJEE ASSISTANT VICE PRESIDENT NSEL 01/12/2005 23/10/2013 23. JAI BAHUKHANDI ASSISTANT VICE PRESIDENT NSEL 27/10/2008 23/10/2013 24. H B MOHANTY ASSISTANT VICE PRESIDENT NSEL 24/08/2005 31/03/2014 25. KALPESH SHAH ASSISTANT VICE PRESIDENT NSEL 01/08/2012 24/03/2014

TABLE V DESIGNATION/RELATIONSHIP OF ENTITY WITH COMPANY ENTITY NAME DESIGNATION/RELATIONSHIP CO. FROM TO NON-EXECUTIVE INDEPENDENT DIRECTOR MCX 29/09/2003 01/09/2013 26. C.M. MANIAR DIRECTOR FTIL 15/10/2010 26/08/2013 NON-EXECUTIVE DIRECTOR MCX 01/04/2005 28/06/2012 27. P. G. KAKODKAR DIRECTOR FTIL 31/01/2001 20/07/2013 CHIEF BUSINESS OFFICER 14/11/2006 31/03/2010 MCX 28. SUMESH PARASRAMPURIA DIRECTOR - BUSINESS DEVELOPMENT 01/04/2010 24/04/2014 CHIEF MARKET OPERATIONS OFFICER 01/04/2008 31/03/2010 MCX 29. DIPAK D. SHAH DIRECTOR - MARKET OPERATIONS 01/04/2010 30/10/2013 30. P.P. KALADHARAN CHIEF TECHNOLOGY OFFICER MCX 28/03/2011 24/04/2014 31. SHVETAL S. VAKIL NON-EXECUTIVE INDEPENDENT DIRECTOR MCX 03/10/2003 01/09/2013 32. J. B. RAM SR. VICE PRESIDENT- MEMBERSHIP MCX 21/06/2010 11/08/2016 NON-EXECUTIVE INDEPENDENT DIRECTOR MCX 13/06/2012 31/03/2015 33. RAVI KAMAL BHARGAVA (NOMINEE OF FMC) 34. RAKESH EBRAHIMPURKAR HEAD-HR MCX 04/02/2013 24/04/2014 NON-EXECUTIVE INDEPENDENT DIRECTOR MCX 14/06/2012 01/09/2013 35. PRAKASH APTE (NOMINEE OF FMC) 36. KALPESH SHUKLA SR. VICE PRESIDENT- MARKET OPERATIONS MCX 01/04/2011 24/01/2014 37. SUMAN DAS SARMA SR.

VICE PRESIDENT- COMMUNICATIONS MCX 01/04/2010 03/12/2012 38. RAMALINGAM M SR. VICE PRESIDENT- MARKET OPERATIONS MCX 01/04/2013 TILL DATE 39. MAHESH JOSHI CHIEF FINANCIAL OFFICER MCX 11/08/2011 31/01/2013 NON-EXECUTIVE INDEPENDENT DIRECTOR MCX 28/11/2011 04/07/2014 40. P. SATISH (NOMINEE OF NABARD) INDEPENDENT DIRECTOR, FMC MCX 03/07/2013 02/07/2016 41. DINESH KUMAR MEHROTRA NOMINATED DEPUTY MANAGING DIRECTOR (NON MCX 01/12/2009 24/04/2014 42. PARVEEN KUMAR SINGHAL BOARD) COMPANY SECRETARY AND CHIEF MCX 08/02/2010 22/04/2014 43. P. RAMANATHAN COMPLIANCE OFFICER 44. RAJESH BAGWE VICE PRESIDENT – HR MCX 01/04/2009 31/10/2012 NON-EXECUTIVE INDEPENDENT DIRECTOR MCX 10/08/2009 12/12/2013 45. R.M. PREMKUMAR (NOMINEE OF FMC) VICE PRESIDENT- LEGAL 06/06/2011 31/03/2013 MCX 46. RAGHAVENDRA PRASAD SR. VICE PRESIDENT- LEGAL 01/04/2013 TILL DATE MANAGING DIRECTOR & CHIEF EXECUTIVE 01/07/2009 30/06/2012 OFFICER (BOARD MEMBER) MCX 47. LAMBERTUS RUTTEN NON EXECUTIVE DIRECTOR 01/07/2009 01/09/2013 NON-EXECUTIVE INDEPENDENT DIRECTOR MCX 14/02/2011 01/04/2013 48. USHA SURESH (NOMINEE OF FMC) NON-EXECUTIVE DIRECTOR MCX 19/04/2002 28/06/2012 49. HARIHARAN VAIDYALINGAM (NOMINEE OF FTIL) SR.

VICE PRESIDENT- MARKET OPERATIONS (DEPUTED TO BFX FROM 19-01- 2009 TO MCX 01/04/2008 31/05/2012 50. GIRISH RAIPURIA 31-05-2012) 51. KOVILAKATH VENUGOPAL INDEPENDENT DIRECTOR – SBI NOMINEE MCX 10/01/2012 08/06/2012 SR. VICE PRESIDENT- RESEARCH & 01/09/2011 05/05/2013 STRATEGY MCX 52. NILANJAN GHOSH CHIEF ECONOMIST 06/05/2013 24/04/2014

TABLE V DESIGNATION/RELATIONSHIP OF ENTITY WITH COMPANY ENTITY NAME DESIGNATION/RELATIONSHIP CO. FROM TO 53. NSEL SUBSIDIARY FTIL NOT APPLICABLE 54. MCX SUBSIDIARY FTIL NOT APPLICABLE PRESIDENT & HEAD - EXCHANGE FTIL 01/10/2004 20/12/2016 55. JIGISH SHANTILAL SONAGARA TECHNOLOGY DIRECTOR - RESEARCH & STRATEGY (NON- FTIL 21/09/2007 TILL DATE 56. MADHOOKAR G. PAVASKAR BOARD) 57. RAJENDRA MEHTA PRESIDENT - MEMBER SOLUTIONS FTIL 13/08/2012 00/01/1900 58. PRASHANT DESAI PRESIDENT - INVESTOR RELATIONS FTIL 10/12/2012 13/03/2014 DEVENDRA KUMAR FTIL 12/12/2005 TILL DATE 59. AGRAWAL CHIEF FINANCIAL OFFICER 60. SHALAKA GADEKAR GROUP HEAD - HUMAN RESOURCES FTIL 22/09/2009 31/05/2015 SR. VICE PRESIDENT & COMPANY FTIL 24/03/2008 26/09/2013 61. NAISHADH DESAI SECRETARY 62. MITEN MEHTA PRESIDENT - NEW PROJECTS FTIL 01/07/2013 20/11/2014 63. NIMISH SHUKLA SR. VICE PRESIDENT - CORPORATE AFFAIRS FTIL 01/12/2009 31/12/2012 64. DILIP TAMBE SR. VICE PRESIDENT – COMMUNICATIONS FTIL 10/09/2012 02/04/2014 SR. VICE PRESIDENT & HEAD -EXCHANGE FTIL 28/12/1999 TILL DATE 65. PRATAP DASHARATH POLKAM TECHNOLOGY SR.

VICE PRESIDENT - EXCHANGE FTIL 17/11/1997 TILL DATE 66. SAMEER M VASANI TECHNOLOGY ROHIT FRUMENTIUS FTIL 17/10/2005 06/11/2015 67. AMBOSTA SR, VICE PRESIDENT & HEAD - ESG SR. VICE PRESIDENT & HEAD - FTIL 04/04/2001 22/08/2013 68. V. ARVINDKUMAR IYENGAR TECHNOLOGY (ZEUS) 69. SHASHI BHARGAVA CHIEF DELIVERY OFFICER-ODIN FTIL 29/10/2007 30/04/2013 70. MEHMOOD VAID SR. VICE PRESIDENT - SALES & MARKETING FTIL 03/09/2012 TILL DATE 71. PARAG AJMERA CHIEF BUSINESS OFFICER FTIL 02/11/2001 TILL DATE 72. SUNIL KHAIRNAR INDEPENDENT NON EXECUTIVE DIRECTOR NSEL 17/05/2013 16/07/2013 ASSISTANT VICE PRESIDENT - BUSINESS NSEL 13/12/2010 02/11/2012 73. JASDEEP SINGH DEVELOPMENT ASSISTANT VICE PRESIDENT - BUSINESS NSEL 20/12/2005 21/12/2013 74. OM PRAKASH AGARWAL DEVELOPMENT ASSISTANT VICE PRESIDENT - PRODUCT NSEL DEVELOPMENT AND COLLATERAL 25/08/2007 31/03/2014 75. PRADEEP KUMAR MISHRA FINANCING 76. NIRAV PANDYA COMPANY SECRETARY NSEL 14/02/2011 17/01/2014 77. PALLAVI KAPOOR EXECUTIVE NSEL 04/01/2010 02/12/2013 78. SANTOSH MANSINGH ASSISTANT VICE PRESIDENT NSEL 06/10/2008 31/03/2014 79. RITESH KUMAR SAHU ASSISTANT MANAGER NSEL 17/07/2006 10/12/2013 80. ASHUTOSH MODAK SENIOR MANAGER NSEL 18/08/2008 23/12/2013 81. RAJESH J GOPANI DIRECTOR LA-FIN 28/03/2013 26/12/2013 iii.

The abovementioned entities and their dependents/relatives (240 entities/individuals) were identified as ‘insiders’ [321 entities in total] and their trades in the scrip of FTIL during the Investigation Period, were examined for any suspected insider trading.

D. Trading by ‘insiders’ in the scrip of FTIL – i. Regulation 3(i) of the Insider Trading Regulations, 1992, states – a. Regulation 3(i) – No insider shall – either on his behalf or on behalf of any other person deal in securities of a company listed on any stock exchange when in possession of any unpublished price sensitive information … ii. Only 21 of the aforementioned 321 ‘insiders’ were found to have traded in the scrip of FTIL during the Investigation period/UPSI period i.e. April 27, 2012–July 31, 2013. The details are as under –

TABLE VI ENTITY NAME BSE BUY NSE BUY TOTAL BUY BSE SELL NSE SELL TOTAL SELL NET QTY (A) (B) C (A+B) (D) (E) F (D+E) C-F 1. P ARAS AJMERA - 5,429 5,429 - - - 5,429 2. P RASHANT DESAI 200 1,880 2,080 - - - 2080 DEVENDRA KUMAR 3. A GRAWAL - 200 200 - - - 200 4. H EMANT VASTANI - 10 10 - 10 10 - SHASHIDHARAN 5. K OTIAN - - - - 1 1 (1) 6. V IDULA MODAK - - - - 5 5 (5) 7. D ILIP TAMBE - - - 50 - 50 (50) 8. D EEPTI RAIPURIA - - - 40 - 40 (40) PRAKASH 9. R AMANATHAN - - - - 30 30 (30) 10. N AISHADH DESAI - 12,000 12,000 - 12,000 12,000 - OM PRAKASH 11. A GARWAL - 320 320 - 270 270 50 SHREEKANT 12. J AVALGEKAR - - - - 9,000 9,000 (9,000) ASHA SHREEKANT 13. J AVALGEKAR - - - - 465 465 (465) 14. M AHESH JOSHI - - - 800 - 800 (800) 15. M ANISH P. SHAH - - - 5,000 10,000 15,000 (15,000) 16. P RAKASH SHAH - - - 10,000 - 10,000 (10,000) HARIHARAN 17. V AIDYALINGAM - - - 3,000 - 3,000 (3,000 ) V. ARVINDKUMAR 18. I YENGAR - - - - 2,100 2,100 (2,100) 19. R AMALINGAM M. - - - - 200 200 (200) 20. D HANASHRI IYENGAR - 100 100 300 1,900 2,200 (2,100) BHARAT KANAIYALAL 21. S HETH - - - 1,153 4,847 6,000 (6,000)

iii. An examination of the trading done by the ‘insiders’ at sr. no. 1–11; 14 and 19 revealed the following – a. Shri Paras Ajmera, Shri Prashant Desai and Shri Devendra Kumar Agrawal were net buyers and did not sell any share of FTIL during the Investigation Period – No adverse inference was drawn for their trades. b. Trades of Shri Hemant Vastani, Shri Shashidharan Kotian, Shri Dilip Tambe, Smt. Deepti Raipuria, Smt. Vidula Modak and Shri Prakash Ramanathan in the scrip of FTIL were found to be insignificant – No adverse inference was drawn for their trades. c. Shri Naishadh Desai bought 12,000 shares of FTIL and sold the same quantity of shares during the Investigation Period. Further, his trading pattern did not indicate any insider trading – No adverse inference was drawn for his trades. d. Shri Om Prakash Agarwal bought 320 shares and sold 270 shares of FTIL during the Investigation Period. Further, his trading pattern did not indicate any insider trading – No adverse inference was drawn for his trades. e. Shri Mahesh Joshi and Shri Ramalingam M. were neither Directors nor employees of FTIL or NSEL. However, since they were employed by MCX, they were considered as ‘insiders’ by virtue of FTIL’s holding in that entity – No adverse inference was drawn for his trades.

iv. Additionally, an analysis of the Top 15 Net Sellers in the scrip of FTIL during the UPSI period was also made – No adverse inference was drawn for their trades.

v. As regards trades of the ‘insiders’ at sr. no. 12–21 (excluding 14 and 19), the Investigation Report noted the following –

I. Shri Shreekant Javalgekar – a. Managing Director and Chief Executive Officer (“CEO”) of MCX during the UPSI period. b. Non–Executive Director of NSEL from February 25, 2011 to August 13, 2013 i.e. during the UPSI period. c. Employee of FTIL from October 25, 2004 to June 30, 2012 (Director–Finance of FTIL on June 30, 2012) and from October 1, 2014 till date. TABLE VIII – A – 1 PRE–UPSI PERIOD UPSI PERIOD POST–UPSI PERIOD  BOUGHT 3700 SHARES OF  DID NOT BUY SHARES OF FTIL.  DID NOT BUY OR SELL SHARES OF FTIL.  HOWEVER, SOLD 9,000 SHARES OF FTIL (AT FTIL  DID NOT SELL SHARES OF NSE). FTIL.

TABLE VIII – A – 2 DATE NO. OF SHARES SOLD AMOUNT (IN ₹) 01.01.2013 1100 12,54,800 02.01.2013 1000 11,40,950 08.03.2013 6900 57,38,527 TOTAL 9000 81,34,277

II. Smt. Asha Shreekant Javalgekar – a. Wife of Shri Shreekant Javalgekar. TABLE VIII – B – 1 PRE–UPSI PERIOD UPSI PERIOD POST–UPSI PERIOD  BOUGHT 375 SHARES OF  DID NOT BUY SHARES OF FTIL.  DID NOT BUY OR SELL SHARES OF FTIL.  HOWEVER, SOLD 465 SHARES OF FTIL (AT FTIL.  DID NOT SELL SHARES OF NSE). FTIL.

TABLE VIII – B – 2 DATE NO. OF SHARES SOLD AMOUNT (IN ₹) 08.03.2013 465 3,87,552

III. Shri Manish P. Shah – a. Promoter of FTIL. b. Brother of Jignesh P. Shah and Manjay P. Shah, Directors and Promoters of FTIL. c. During the UPSI period, Jignesh P. Shah was Chairman and Managing Director of FTIL and Manjay Shah was the Whole-Time Director. d. Jignesh P. Shah was Non–Executive Director in NSEL during the period when NSEL’s Circular dated July 31, 2013, was issued and continued in that capacity till December 22, 2014. TABLE VIII – C – 1 PRE–UPSI PERIOD UPSI PERIOD POST–UPSI PERIOD  DID NOT BUY OR SELL  DID NOT BUY SHARES OF FTIL.  DID NOT BUY OR SELL SHARES OF SHARES OF FTIL.  HOWEVER, SOLD 15,000 SHARES OF FTIL (AT FTIL. BSE AND NSE).

TABLE VIII – C – 2 DATE NO. OF SHARES SOLD AMOUNT (IN ₹) 18.01.2013 (NSE) 10,000 1,15,02,805 (BSE) 5,000 57,47,586 TOTAL 15,000 1,72,50,391

IV. Shri Prakash Shah – a. Promoter of FTIL. b. Father of Jignesh P. Shah and Manjay P. Shah, Directors and Promoters of FTIL.

c. During the UPSI period, Jignesh P. Shah was Chairman and Managing Director of FTIL and Manjay Shah was the Whole-Time Director. d. Jignesh P. Shah was Non–Executive Director in NSEL during the period when NSEL’s Circular dated July 31, 2013, was issued and continued in that capacity till December 22, 2014. TABLE VIII – D – 1 PRE–UPSI PERIOD UPSI PERIOD POST–UPSI PERIOD  DID NOT BUY OR SELL  DID NOT BUY SHARES OF FTIL.  DID NOT BUY OR SELL SHARES OF SHARES OF FTIL.  HOWEVER, SOLD 10,000 SHARES OF FTIL (AT FTIL. BSE).

TABLE VIII – D – 2 DATE NO. OF SHARES SOLD AMOUNT (IN ₹) 22.08.2012 1,000 8,52,525 08.10.2012 9,000 88,54,373 TOTAL 10,000 97,06,898

V. Shri Hariharan Vaidyalingam – a. Employee of FTIL from January 1, 2001 to June 20, 2011. b. Non–Executive Non–Independent Director (Nominated by FTIL) of NSEL from May 18, 2005 to December 20, 2011. c. On February 6, 2012, FMC was made ‘designated agency’ by DCA to regulate the terms of the Notification dated June 5, 2007. As noted in the chronology of events, paired contracts were being run on NSEL since September 2009 and default had started in 2011–12. Shri Hariharan Vaidyalingam was a Director during the aforesaid period. d. Since, FTIL was the holding company of NSEL, it is reasonably expected that Directors, etc. of FTIL and NSEL had access to UPSI which was emanated from NSEL. It is therefore, reasonably expected that Shri Hariharan Vaidyalingam had access to the aforesaid UPSI. TABLE VIII – E – 1 PRE–UPSI PERIOD UPSI PERIOD POST–UPSI PERIOD  DID NOT BUY OR SELL  DID NOT BUY SHARES OF FTIL.  DID NOT BUY OR SELL SHARES OF SHARES OF FTIL.  HOWEVER, SOLD 3000 SHARES OF FTIL (AT FTIL. BSE).

TABLE VIII – E – 2 DATE NO. OF SHARES SOLD AMOUNT (IN ₹) 16.11.2012 3000 33,92,214

VI. Shri V. Arvindkumar Iyengar – a. Employee of FTIL from April 1, 2001 to March 2009 and subsequently from October 2011 to August 2013. b. In the intervening period i.e. from April 2009 to September 2011, was transferred to Ticket Plant Infovending Limited, a wholly owned subsidiary of FTIL. c. Senior Vice–President and Head of Technology Department of FTIL during the UPSI period. TABLE VIII – F – 1 PRE–UPSI PERIOD UPSI PERIOD POST–UPSI PERIOD  DID NOT BUY OR SELL  DID NOT BUY SHARES OF FTIL.  DID NOT BUY OR SELL SHARES OF SHARES OF FTIL.  HOWEVER, SOLD 2100 SHARES OF FTIL (AT FTIL. NSE).

TABLE VIII – F – 2 DATE NO. OF SHARES SOLD AMOUNT (IN ₹) 05.11.2012 1000 10,48,016 06.11.2012 400 4,16,551 07.11.2012 200 2,11,330 08.11.2012 200 2,14,130 09.11.2012 300 3,28,565 TOTAL 2100 22,18,592

VII. Smt. Dhanashri Iyengar – a. Wife of Shri V. Arvindkumar Iyengar. TABLE VIII – G – 1 PRE–UPSI PERIOD UPSI PERIOD POST–UPSI PERIOD  BOUGHT 500 SHARES OF  BOUGHT 100 SHARES OF FTIL.  DID NOT BUY OR SELL SHARES OF FTIL.  SOLD 2200 SHARES OF FTIL (1900 AT NSE FTIL.  SOLD 200 SHARES OF FTIL. AND 300 AT BSE).

TABLE VIII – G – 2 DATE NO. OF SHARES SOLD AMOUNT (IN ₹) 02.11.2012 (NSE) 500 5,15,325 05.11.2012 (NSE) 500 5,25,325 06.11.2012 (NSE) 200 2,08,403 07.11.2012 (NSE) 500 5,28,825 08.11.2012 (BSE) 300 3,21,002 08.11.2012 (NSE) 200 2,15,385 TOTAL 2200 23,14,265

VIII. Shri Bharat Kanaiyalal Sheth – a. Brother of Ravi K. Sheth, Director of FTIL during the UPSI period. b. Ravi K. Sheth continued to be a Director in FTIL till February 21, 2014 i.e. after the announcement of suspension of trading by NSEL on July 31, 2013. TABLE VIII – H – 1 PRE–UPSI PERIOD UPSI PERIOD POST–UPSI PERIOD  DID NOT BUY OR SELL  DID NOT BUY SHARES OF FTIL.  DID NOT BUY OR SELL SHARES OF SHARES OF FTIL.  HOWEVER, SOLD 6000 SHARES OF FTIL FTIL. (1,153 SHARES AT BSE AND 4,847 SHARES AT NSE).

TABLE VIII – H – 2 DATE NO. OF SHARES SOLD AMOUNT (IN ₹) 09.11.2012 (BSE) 500 5,45,295 09.11.2012 (NSE) 1,500 16,45,116 12.11.2012 (NSE) 1,000 11,48,000 13.11.2012 (NSE) 500 6,05,000 20.11.2012 (NSE) 1,000 11,52,190 13.11.2012 (BSE) 500 6,05,000 06.02.2013 (NSE) 847 9,29,045 06.02.2013 (BSE) 153 1,67,841 TOTAL 6,000 67,97,487 vi. In the Investigation Report, the Investigating Authority inter alia concluded – a. The UPSI came into existence on April 27, 2012 i.e. issuance of SCN by DCA, to NSEL. b. The UPSI remained unpublished till July 31, 2013 i.e. date of issuance of NSEL’s Circular. c. Shri Shreekant Javalgekar; Smt. Asha Shreekant Javalgekar; Shri Manish P. Shah; Shri Prakash Shah; Shri Hariharan Vaidyalingam; Shri V. Arvindkumar Iyengar; Smt. Dhanashri Iyengar and Shri Bharat Kanaiyalal Sheth, were ‘insiders’ as per Regulation 2(e) read with Regulations 2(c) and 2(h) of the Insider Trading Regulations, 1992. d. As ‘insiders’, the aforementioned entities had/were reasonably expected to have had access to the UPSI. e. The relatively substantial sale of FTIL shares by the aforementioned entities during the period from August 22, 2012 to March 8, 2013, was when in possession of UPSI. f. The aforementioned entities therefore, engaged in insider trading which is prohibited under the Insider Trading Regulations, 1992 read with the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“Insider Trading Regulations, 2015”).

E. Loss averted by ‘insiders’ on trades in the scrip of FTIL – i. The following table brings out the loss averted in the scrip of FTIL by the ‘insiders’ at sr. no. 12–13; 15–18 and 20–21, by virtue of insider trading –

TABLE VII NAME NO OF TOTAL SALE AVERAGE PRICE AVG. CLOSING NOTIONAL SALE LOSS SHARES VALUE (₹) (₹) PRICE ON VALUE AS ON AVERTED (₹) SOLD (Y) 1.08.2013 (₹) 1.08.2013 (₹) (X) (A) = (Y)/(X) (Z) (B)=(X)*(Z) (Y)-(B) SHREEKANT 9,000 81,34,277 904 191.70 17,25,300 64,08,977 JAVALGEKAR ASHA 465 3,87,552 833 191.70 89,141 2,98,412 SHREEKANT JAVALGEKAR MANISH P. 15,000 1,72,50,391 1,150 191.70 28,75,500 1,43,74,891 SHAH PRAKASH SHAH 10,000 97,06,898 971 191.70 19,17,000 77,89,898 HARIHARAN 3,000 33,92,214 1,131 191.70 5,75,100 28,17,114 VAIDYALINGAM V. 2,100 22,18,592 1,056 191.70 4,02,570 18,16,022 ARVINDKUMAR IYENGAR DHANASHRI 2,200 23,14,265 1,052 191.70 4,21,740 18,92,525 IYENGAR BHARAT 6,000 67,97,487 1,133 191.70 11,50,200 56,47,287 KANAIYALAL SHETH **As the scrip of FTIL was trading at both NSE and BSE during the Investigation Period, average closing price on August 1, 2013 was taken for computation of Notional sale value on August 1, 2013. The closing price of scrip on August 1, 2013 at NSE was ₹191.65 and at BSE was ₹191.75. Therefore, the average closing price of scrip on August 1, 2013 was ₹191.70.

Consideration of Issues and Findings –

2.1 I have considered the Investigation Report alongwith all relevant material annexed therein.

2.2 In addition to the legal provisions reproduced in the preceding paragraphs, the contravention of which have been alleged in the Investigation Report, the following may be noted –

INSIDER TRADING REGULATIONS 1992 REGULATION 4 ANY INSIDER WHO DEALS IN SECURITIES IN CONTRAVENTION OF THE PROVISIONS OF REGULATION 3 … SHALL BE GUILTY OF INSIDER TRADING [SEE PAGE 13 FOR REGULATION 3]. INSIDER TRADING REGULATIONS, 2015 REGULATION 12(2)(a) THE PREVIOUS OPERATION OF THE PIT REGULATIONS, 1992 OR ANYTHING DULY DONE OR SUFFERED THEREUNDER, ANY RIGHT, PRIVILEGE, OBLIGATION OR LIABILITY ACQUIRED, ACCRUED OR INCURRED UNDER THE REPEALED REGULATIONS, ANY PENALTY, FORFEITURE OR PUNISHMENT INCURRED IN RESPECT OF ANY OFFENCE COMMITTED AGAINST THE REPEALED REGULATIONS, OR ANY INVESTIGATION, LEGAL PROCEEDING OR REMEDY IN RESPECT OF ANY SUCH RIGHT, PRIVILEGE, OBLIGATION, LIABILITY, PENALTY, FORFEITURE OR PUNISHMENT AS AFORESAID, SHALL REMAIN UNAFFECTED AS IF THE REPEALED REGULATIONS HAD NEVER BEEN REPEALED. REGULATION 12(2)(b) ANYTHING DONE OR ANY ACTION TAKEN OR PURPORTED TO HAVE BEEN DONE OR TAKEN INCLUDING ANY ADJUDICATION, ENQUIRY OR INVESTIGATION COMMENCED OR SHOW CAUSE NOTICE ISSUED UNDER THE REPEALED PROVISIONS OF INSIDER TRADING REGULATIONS, 1992, PRIOR TO SUCH REPEAL, SHALL BE DEEMED TO HAVE BEEN DONE OR TAKEN UNDER THE CORRESPONDING PROVISIONS OF INSIDER TRADING REGULATIONS, 2015. SEBI ACT, 1992 SECTION 12A(d) NO PERSON SHALL DIRECTLY OR INDIRECTLY— d) ENGAGE IN INSIDER TRADING;

2.3 Implication of the SCN dated April 27, 2012 i.e. suspension of contracts and deferral of settlements and subsequent payment defaults by Members of NSEL alongwith loss of reputation of Promoters/Management of FTIL – Whether UPSI in respect of the shares of FTIL?

2.3.1 From the chronology of events leading to the issuance by NSEL, of the Circular dated July 31, 2013 (Table III at pages 3–6), the following is noted – a. The issuance of the SCN dated April 27, 2012, by DCA, triggered a chain of events in respect of NSEL and its holding company i.e. FTIL. b. NSEL’s press release dated October 3, 2012, was issued to cover up the irregularities in its functioning and to mislead the public. c. The discontinuation of irregularities in the functioning of NSEL i.e. cessation of short selling by its Members, pairing of contracts and settlement of contracts beyond 11 days, was imminent.

d. The discontinuation of irregularities would in turn result in impending payment defaults by Members of NSEL and lead to the loss of reputation of the Promoters/Management of FTIL. e. Prior to the aforesaid SCN, the irregularities in the functioning of NSEL were not in the knowledge of the concerned regulatory authority and no concrete action had yet been taken until the issuance of the aforesaid SCN, by DCA to NSEL.

2.3.2 In this context, we may refer to the observations of Hon’ble SAT in the matter of Rajiv B. Gandhi & Others vs. SEBI (Order dated May 9, 2008), – “UPSI has been defined in the regulations to mean any information which relates to any of the matters referred to in sub clauses (i) to (viii) of Regulation 2(k) and is not generally known or published by the company for general information but which, if published or known, is likely to materially affect the price of the securities of the company in the market. In other words, any information which is not known but, if known could either way affect the price of the scrip of the company would be UPSI.”

2.3.3 The implication of the SCN dated April 27, 2012 (issued by DCA to NSEL) i.e. suspension of contracts and deferral of settlements and subsequent payment defaults by Members of NSEL and loss of reputation of Promoters/Management of FTIL, was UPSI. The UPSI was directly related to its holding company i.e. FTIL.

2.3.4 Upon its publication, with the issuance of NSEL’s Circular dated July 31, 2013, a material impact on the share price of FTIL (the price of the scrip decreased substantially on August 1, 2013 and August 2, 2013) was observed –

TABLE IV DATE OPENING HIGHEST LOWEST CLOSING PRICE SHARES DIFFERENCE IN PRICE TRADED PRICE TRADED PRICE TRADED SHARE PRICE (%) BSE 31.07.2013 ₹547.00 ₹559.00 ₹514.10 ₹541.55 94,707 *-66.76% 01.08.2013 ₹487.40 ₹487.40 ₹180.35 ₹191.75 62,54,247 02.08.2013 ₹173.00 ₹178.85 ₹105.50 ₹151.25 64,80,729 *-80.52% NSE 31.07.2013 ₹544.00 ₹559.90 ₹513.95 ₹539.85 6,18,451 *-66.66% 01.08.2013 ₹485.90 ₹485.90 ₹180.00 ₹191.65 2,66,79,527 02.08.2013 ₹173.30 ₹175.40 ₹105.45 ₹147.50 2,26,14,644 *-80.47% *The difference in share price is calculated as a percentage of the difference between the closing price on July 31, 2013 and the lowest traded price on (a) August 1, 2013 and (b) August 2, 2013.

2.3.5 Upon a consideration of the aforementioned paragraphs, I find myself in agreement with the observations contained in the Investigation Report as regards the UPSI in respect of the shares of FTIL. The implication of the SCN dated April 27, 2012 (issued by DCA to NSEL) i.e. suspension of contracts and deferral of settlements and subsequent payment defaults by Members of NSEL and loss of reputation of Promoters/Management of FTIL, was prima facie UPSI in respect of the shares of FTIL.

2.4.1 Issues – a. Whether Shri Shreekant Javalgekar; Smt. Asha Shreekant Javalgekar; Shri Manish P. Shah; Shri Prakash Shah; Shri Hariharan Vaidyalingam; Shri V. Arvindkumar Iyengar; Smt. Dhanashri Iyengar and Shri Bharat Kanaiyalal Sheth, were ‘insiders’ as per Regulation 2(e) read with Regulation 2(c) and Regulation 2(h) of the Insider Trading Regulations, 1992? b. Whether the trades executed by the aforesaid ‘insiders’ during the Investigation Period were done when in possession of UPSI in violation of the prohibition contained in Regulation 3(i) of the Insider Trading Regulations, 1992? c. Consequently, by dealing in securities in contravention of Regulation 3(i) of the Insider Trading Regulations, 1992, whether the ‘insiders’ were guilty of insider trading under Regulation 4 of the said Regulations and resultantly, Section 12A(d) of the SEBI Act? d. By indulging in insider trading, whether the ‘insiders’ averted any potential loss?

2.4.2 As per Regulation 3(i) of the Insider Trading Regulations, 1992, an ‘insider’ is prohibited from dealing in securities of a listed company when in possession of UPSI.

2.4.3 Regulation 4 of the said Regulations states that any ‘insider’ who deals in securities in contravention of the provisions of Regulation 3 shall be guilty of insider trading.

2.4.4 From the Investigation Report, the following is noted in respect of certain entities who traded in the scrip of FTIL during the Investigation Period/UPSI period – i. Shri Shreekant Javalgekar and Smt. Asha Shreekant Javalgekar –

 Shri Shreekant Javalgekar served in a managerial capacity in FTIL, NSEL and MCX. During the UPSI period, he was the Non–Executive Director in NSEL and therefore, was an ‘insider’ in accordance with the Insider Trading Regulations, 1992.  As an ‘insider’, he would have been aware of all material developments in NSEL including the SCN dated April 27, 2012 and NSEL’s Circular dated July 31, 2013. In other words, it is reasonably expected that Shri Shreekant Javalgekar would have had access to UPSI in respect of securities FTIL. Therefore, he was in possession of UPSI during the Investigation Period/UPSI period.  Smt. Asha Shreekant Javalgekar qualified as an ‘insider’ under the Insider Trading Regulations, 1992, on account of being an ‘immediate relative’ of Shri Shreekant Javalgekar. Since her husband, Shri Shreekant Javalgekar was the Non–Executive Director in NSEL during the UPSI period, it can be reasonably expected that she would have received or had access to UPSI in respect of securities FTIL.  Shri Shreekant Javalgekar sold 9000 shares of FTIL (for ₹81,34,277) during the Investigation Period/UPSI period, when in possession of UPSI.  Similarly, during the Investigation Period/UPSI period and when in possession of UPSI, Smt. Asha Shreekant Javalgekar sold 465 shares (for ₹3,87,552) of FTIL.  The aforesaid trades in FTIL of Shri Shreekant Javalgekar and Smt. Asha Shreekant Javalgekar, when in possession of UPSI, were in violation of the prohibition contained in Regulation 3(i) of the Insider Trading Regulations, 1992.  As a result of the aforesaid, Shri Shreekant Javalgekar and Smt. Asha Shreekant Javalgekar are guilty of insider trading in the scrip of FTIL as per Regulation 4 of the Insider Trading Regulations, 1992.  By engaging in insider trading, the aforementioned entities also violated Section 12A(d) of the SEBI Act.  By indulging in insider trading, Shri Shreekant Javalgekar and Smt. Asha Shreekant Javalgekar averted potential loss in the scrip of FTIL amounting to ₹64,08,977 and ₹2,98,412, respectively.

ii. Shri Manish P. Shah –

 Shri Manish P. Shah is the Promoter of FTIL. His brothers, viz. Shri Jignesh P. Shah and Shri Manjay P. Shah, were Promoters of FTIL and also its Directors during the UPSI period. Shri Jignesh P. Shah was also the Non–Executive Director in NSEL during the UPSI period and continued in that capacity till December 22, 2014.  Shri Manish P. Shah therefore, qualified as an ‘insider’ under the Insider Trading Regulations, 1992, on account of being the brother of Shri Jignesh P. Shah and Shri Manjay P. Shah. He would have received or had access to UPSI in respect of securities FTIL.

 As an ‘insider’, he would have been aware of all material developments in NSEL including the SCN dated April 27, 2012 and NSEL’s Circular dated July 31, 2013, and therefore, he was in possession of UPSI during the Investigation Period/UPSI period.  Shri Manish P. Shah sold 15,000 shares of FTIL (for ₹1,72,50,391) during the Investigation Period/UPSI period, when in possession of UPSI.  The aforesaid trade in FTIL of Shri Manish P. Shah, when in possession of UPSI, was in violation of the prohibition contained in Regulation 3(i) of the Insider Trading Regulations, 1992.  As a result of the aforesaid, Shri Manish P. Shah is guilty of insider trading in the scrip of FTIL as per Regulation 4 of the Insider Trading Regulations, 1992.  By engaging in insider trading, the aforementioned entity also violated Section 12A(d) of the SEBI Act.  By indulging in insider trading, Shri Manish P. Shah averted potential loss in the scrip of FTIL amounting to ₹1,43,74,891.

iii. Shri Prakash Shah –

 Shri Prakash Shah is a Promoter of FTIL. His sons, viz. Shri Jignesh P. Shah and Shri Manjay P. Shah, were Promoters of FTIL and also its Directors during the UPSI period. Shri Jignesh P. Shah was also the Non–Executive Director in NSEL during the UPSI period and continued in that capacity till December 22, 2014.  Shri Prakash Shah therefore, qualified as an ‘insider’ under the Insider Trading Regulations, 1992, on account of being the father of Shri Jignesh P. Shah and Shri Manjay P. Shah. He would have received or had access to UPSI in respect of securities FTIL.  As an ‘insider’, he would have been aware of all material developments in NSEL including the SCN dated April 27, 2012 and NSEL’s Circular dated July 31, 2013, and therefore, he was in possession of UPSI during the Investigation Period/UPSI period.  Shri Prakash Shah sold 10,000 shares of FTIL (for ₹97,06,898) during the Investigation Period/UPSI period, when in possession of UPSI.  The aforesaid trade in FTIL of Shri Prakash Shah, when in possession of UPSI, was in violation of the prohibition contained in Regulation 3(i) of the Insider Trading Regulations, 1992.  As a result of the aforesaid, Shri Prakash Shah is guilty of insider trading in the scrip of FTIL as per Regulation 4 of the Insider Trading Regulations, 1992.

 By engaging in insider trading, the aforementioned entity also violated Section 12A(d) of the SEBI Act.  By indulging in insider trading, Shri Prakash Shah averted potential loss in the scrip of FTIL amounting to ₹77,89,898.

iv. Shri Hariharan Vaidyalingam –

 Shri Hariharan Vaidyalingam was an employee of FTIL from January 1, 2001 to June 20, 2011.  He was also the Non–Executive Non–Independent Director (Nominated by FTIL) of NSEL from May 18, 2005 to December 20, 2011. As noted in the chronology of events (Table III at pages 3–6), paired contracts were being run on NSEL since September 2009 and default had started in 2011–12. Shri Hariharan Vaidyalingam was a Director during the aforesaid period.  Shri Hariharan Vaidyalingam therefore, qualified as an ‘insider’ under the Insider Trading Regulations, 1992.  Since, FTIL was the holding company of NSEL, it is reasonably expected that Directors, etc. of FTIL and NSEL had access to UPSI which was emanated from NSEL. It is therefore, reasonably expected that Shri Hariharan Vaidyalingam had access to the aforesaid UPSI in respect of securities FTIL.  As an ‘insider’, he would have been aware of all material developments in NSEL including the SCN dated April 27, 2012 and NSEL’s Circular dated July 31, 2013, and therefore, he was in possession of UPSI during the Investigation Period/UPSI period.  Shri Hariharan Vaidyalingam sold 3000 shares of FTIL (for ₹33,92,214) during the Investigation Period/UPSI period, when in possession of UPSI.  The aforesaid trade in FTIL of Shri Hariharan Vaidyalingam, when in possession of UPSI, was in violation of the prohibition contained in Regulation 3(i) of the Insider Trading Regulations, 1992.  As a result of the aforesaid, Shri Hariharan Vaidyalingam is guilty of insider trading in the scrip of FTIL as per Regulation 4 of the Insider Trading Regulations, 1992.  By engaging in insider trading, the aforementioned entity also violated Section 12A(d) of the SEBI Act.  By indulging in insider trading, Shri Hariharan Vaidyalingam averted potential loss in the scrip of FTIL amounting to ₹28,17,114.

v. Shri V. Arvindkumar Iyengar –

 Shri V. Arvindkumar Iyengar was an employee of FTIL from April 1, 2001 to March 2009 and subsequently from October 2011 to August 2013. He was a Senior Vice– President and Head of Technology Department of FTIL during the UPSI period.  Shri V. Arvindkumar Iyengar therefore, qualified as an ‘insider’ under the Insider Trading Regulations, 1992.  Since, FTIL was the holding company of NSEL, it is reasonably expected that Directors, Officers, etc. of FTIL and NSEL had access to UPSI which was emanated from NSEL. It is therefore, reasonably expected that Shri V. Arvindkumar Iyengar had access to the aforesaid UPSI in respect of securities FTIL.  As an ‘insider’, he would have been aware of all material developments in NSEL including the SCN dated April 27, 2012 and NSEL’s Circular dated July 31, 2013, and therefore, he was in possession of UPSI during the Investigation Period/UPSI period.  Shri V. Arvindkumar Iyengar sold 2100 shares of FTIL (for ₹22,18,592) during the Investigation Period/UPSI period, when in possession of UPSI.  The aforesaid trade in FTIL of Shri V. Arvindkumar Iyengar, when in possession of UPSI, was in violation of the prohibition contained in Regulation 3(i) of the Insider Trading Regulations, 1992.  As a result of the aforesaid, Shri V. Arvindkumar Iyengar is guilty of insider trading in the scrip of FTIL as per Regulation 4 of the Insider Trading Regulations, 1992.  By engaging in insider trading, the aforementioned entity also violated Section 12A(d) of the SEBI Act.  By indulging in insider trading, Shri V. Arvindkumar Iyengar averted potential loss in the scrip of FTIL amounting to ₹18,16,022.

vi. Smt. Dhanashri Iyengar –

 Smt. Dhanashri Iyengar is the wife of Shri V. Arvindkumar Iyengar.  Smt. Dhanashri Iyengar therefore, qualified as an ‘insider’ under the Insider Trading Regulations, 1992, on account of being an ‘immediate relative’ of Shri V. Arvindkumar Iyengar.  Since, her husband, Shri V. Arvindkumar Iyengar was a Senior Vice–President and Head of Technology Department of FTIL during the UPSI period, it can be reasonably expected that she would have received or had access to UPSI in respect of securities FTIL.  As an ‘insider’, she would have been aware of all material developments in NSEL including the SCN dated April 27, 2012 and NSEL’s Circular dated July 31, 2013, and therefore, she was in possession of UPSI during the Investigation Period/UPSI period.  Smt. Dhanashri Iyengar sold 2200 shares of FTIL (for ₹23,14,265) during the Investigation Period/UPSI period, when in possession of UPSI.  The aforesaid trade in FTIL of Smt. Dhanashri Iyengar, when in possession of UPSI, was in violation of the prohibition contained in Regulation 3(i) of the Insider Trading Regulations, 1992.  As a result of the aforesaid, Smt. Dhanashri Iyengar is guilty of insider trading in the scrip of FTIL as per Regulation 4 of the Insider Trading Regulations, 1992.  By engaging in insider trading, the aforementioned entity also violated Section 12A(d) of the SEBI Act.  By indulging in insider trading, Smt. Dhanashri Iyengar averted potential loss in the scrip of FTIL amounting to ₹18,92,525.

vii. Shri Bharat Kanaiyalal Sheth –

 Shri Bharat Kanaiyalal Sheth is the brother of Shri Ravi K. Sheth, Director of FTIL during the UPSI period. Shri Ravi K. Sheth continued to be a Director in FTIL till February 21, 2014.  Shri Bharat Kanaiyalal Sheth therefore, qualified as an ‘insider’ under the Insider Trading Regulations, 1992, on account of being an ‘immediate relative’ of Shri Ravi K. Sheth.  Since, his brother, Shri Ravi K. Sheth was the Director of FTIL during the UPSI period, it can be reasonably expected that he would have received or had access to UPSI in respect of securities FTIL  As an ‘insider’, he would have been aware of all material developments in NSEL including the SCN dated April 27, 2012 and NSEL’s Circular dated July 31, 2013, and therefore, he was in possession of UPSI during the Investigation Period/UPSI period.  Shri Bharat Kanaiyalal Sheth sold 6000 shares of FTIL (for ₹67,97,487) during the Investigation Period/UPSI period, when in possession of UPSI.

 The aforesaid trade in FTIL of Shri Bharat Kanaiyalal Sheth, when in possession of UPSI, was in violation of the prohibition contained in Regulation 3(i) of the Insider Trading Regulations, 1992.  As a result of the aforesaid, Shri Bharat Kanaiyalal Sheth is guilty of insider trading in the scrip of FTIL as per Regulation 4 of the Insider Trading Regulations, 1992.  By engaging in insider trading, the aforementioned entity also violated Section 12A(d) of the SEBI Act.  By indulging in insider trading, Shri Bharat Kanaiyalal Sheth averted potential loss in the scrip of FTIL amounting to ₹56,47,287.

2.4.5 Upon a consideration of the preceding paragraph, I find as under – a. Shri Shreekant Javalgekar; Smt. Asha Shreekant Javalgekar; Shri Manish P. Shah; Shri Prakash Shah; Shri Hariharan Vaidyalingam; Shri V. Arvindkumar Iyengar; Smt. Dhanashri Iyengar and Shri Bharat Kanaiyalal Sheth, were prima facie ‘insiders’ as per Regulation 2(e) read with Regulation 2(c)/Regulation 2(h) of the Insider Trading Regulations, 1992. b. The aforementioned entities prima facie traded in the scrip of FTIL when in possession of UPSI and therefore, are prima facie guilty of insider trading thereby violating Regulation 3(i) and Regulation 4 of the Insider Trading Regulations, 1992; Section 12A(d) of the SEBI Act. c. On account of prima facie insider trading, the aforementioned entities were able to avoid any potential loss in the scrip of FTIL.

Conclusion –

3.1 A basic premise that underlines the integrity of securities market is that persons connected with such market conform to the standards of transparency, good governance and ethical behaviour prescribed in securities laws and do not resort to fraudulent and deceptive activities like insider trading. Such activities are detrimental to the interests of the investors as well as the securities market. No person can be allowed to enrich himself/herself by way of wrongful or ill-gotten gains or avoidance of potential loss made on account of such activity. SEBI has been entrusted with the important mandate of protecting investors and safeguarding the integrity of the securities market. In this regard, necessary powers have been conferred upon SEBI under the securities laws. The Insider Trading Regulations have put in place a framework for prohibition of insider trading in securities. The prohibitions provided in the Regulations ensure a level-playing field in the securities market and safeguard the interest of investors and integrity of securities market. I am of the view that the object and spirit of the Insider

Trading Regulations would get defeated if the alleged violators of the said Regulations are not made to face the consequences. It therefore, becomes necessary for SEBI to take steps for impounding and retaining the loss averted by the persons mentioned at paragraph 2.4.5(a) on account of insider trading in the scrip of FTIL. As an interim measure, an Ad–Interim Ex–Parte Order for inter alia impounding the loss averted by the persons mentioned at paragraph 2.4.5(a), needs to be issued.

Order –

4.1 In view of the foregoing, I, in exercise of the powers conferred upon me in terms of Section 19 read with Sections 11(1), 11(4) and 11B of the SEBI Act, issue the following directions –

A. During the Investigation period/UPSI period i.e. April 27, 2012–July 31, 2013, the following persons wrongfully averted loss on account of insider trading in the scrip of FTIL. As the loss averted by the aforementioned persons were achieved during the period from April 27, 2012 to July 31, 2013, it becomes reasonable and necessary to levy an interest at the rate of 12% simple interest per annum, as under –

NAME PAN LOSS AVERTED INTEREST @12%P.A. TOTAL (₹) (₹) (₹) 1. SHREEKANT JAVALGEKAR AARPJ9648L 64,08,977 30,76,309 94,85,286 2. ASHA SHREEKANT JAVALGEKAR ABRPJ2888H 2,98,412 1,43,238 4,41,650 3. MANISH P. SHAH AMXPS9294F 1,43,74,891 68,99,948 2,12,74,839 4. PRAKASH SHAH AOUPS4514H 77,89,898 37,39,151 1,15,29,049 5. HARIHARAN VAIDYALINGAM AABPV4103E 28,17,114 13,52,215 41,69,329 6. V. ARVINDKUMAR IYENGAR AADPI3727M 18,16,022 8,71,691 26,87,713 7. DHANASHRI IYENGAR AEQPK1802C 18,92,525 9,08,412 28,00,937 8. BHARAT KANAIYALAL SHETH AAQPS2482L 56,47,287 27,10,698 83,57,985

B. In light of the findings contained in this Order, I hereby impound the total loss averted by the persons at paragraph 4.1(A).

C. The persons at paragraph 4.1(A) are directed not to dispose of or alienate any of their assets/properties/securities, till such time the individual amount of loss averted is credited to an Escrow Account [“Escrow Account in Compliance with SEBI Order dated August 1, 2017 – A/c (in the name of the respective person)”] created specifically for the purpose in a Nationalized Bank. The Escrow Account(s) shall create a lien in favour of SEBI and the monies kept therein shall not be released without permission from SEBI. On production of proof by the persons at paragraph 4.1(A)

that the individual amount of loss averted has been deposited in the Escrow Account, SEBI shall communicate to the Banks and Depositories to defreeze their respective accounts.

D. The persons at paragraph 4.1(A) are directed to individually provide, within 7 days of this Order, a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/securities, if held in physical form and details of companies in which they hold substantial or controlling interest.

E. Banks are directed that no debits shall be made, without permission of SEBI, in respect of the bank accounts held by the persons at paragraph 4.1(A), except for the purposes of transfer of funds to the Escrow Account. Further, the Depositories are also directed that no debit shall be made, without permission of SEBI, in respect of the demat accounts held by the aforesaid persons. However, credits, if any, into the accounts maybe allowed. Banks and the Depositories are directed to ensure that all the aforesaid directions are strictly enforced. Further, debits may also be allowed for amounts available in the account in excess of the amount to be impounded. Banks are allowed to debit the accounts for the purpose of complying with this Order.

F. The above directions shall come into force with immediate effect and shall be in force till further Orders.

G. The prima facie observations/findings contained in this Order are made on the basis of Investigation conducted by SEBI in the matter. Accordingly, the persons at paragraph 4.1(A) are advised to show cause as to why suitable directions (including the following) under Sections 11(1), 11(4) and 11B of the SEBI Act and Regulation 11 of the Insider Trading Regulations, 1992 read with Regulation 12 of the Insider Trading Regulations, 2015, should not be taken/imposed against them for the alleged violations of Regulation 3(i) and Regulation 4 of the Insider Trading Regulations, 1992 and also Section 12A(d) of the SEBI Act – i. Directing them to disgorge an amount equivalent to the total loss averted on account of insider trading in the scrip of FTIL.

H. The persons at paragraph 4.1(A) may file their replies to SEBI within 21 days from the date of receipt of this Order. They may also indicate in their replies whether they wish to avail an opportunity of personal hearing in the matter.

I. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against the persons/entities covered under this Order, in accordance with law.

J. This Order shall be served on all Recognized Stock Exchanges, Depositories and Banks to ensure necessary compliance.

Place: Mumbai S. RAMAN Date: August 2, 2017 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA